The OIG published a notice July 11, 2014 announcing that it is considering revising its nonbinding criteria, established in 1997, outlining the circumstances under which the OIG may exercise its permissive authority under Section 1128(b)(7) of the Social Security Act to exclude an individual or entity from participation in the federal health care programs for engaging in conduct described in sections 1128A and 1128B of the Act (e.g., submitting or causing the submission of false or fraudulent claims or soliciting or paying kickbacks in violation of the Federal Anti-Kickback Statute). Since 1997, OIG has used these criteria in False Claims Act cases and administrative matters to evaluate whether to impose a permissive exclusion or release this authority in exchange for the defendant’s entering into a Corporate Integrity Agreement with OIG. The OIG suggests that “updated guidance could better reflect the state of the health care industry today, including the changes in legal requirements and the emergence of the health care compliance industry.” The OIG is particularly interested in input on: (1) whether there should be differences in the criteria for individuals and entities and (2) whether and how to consider a defendant's existing compliance program. The OIG will accept comments through September 9, 2014. After reviewing comments, the OIG will decide whether and how to revise its non-binding exclusion criteria.
HHS has issued a proposed rule that would specify additional options for annual eligibility redeterminations and renewal and re-enrollment notice requirements for qualified health plans offered through the ACA insurance Exchange/Marketplace, beginning with annual redeterminations for coverage for plan year 2015. Comments are due July 28, 2014.
CMS Proposes Major Changes to Medicare DMEPOS Payment/Coverage Policy Inside/Outside of Competitive Bidding Areas
On July 2, 2014, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule that would make a series of significant changes to Medicare coverage and payment policies for durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS). Notably, the proposed rule would establish a methodology for adjusting Medicare DMEPOS fee schedule payment amounts across the country using information from the Medicare DMEPOS Competitive Bidding Program (CBP) – which CMS estimates would cut Medicare DMEPOS reimbursement by more than $7 billion in FYs 2016 through 2020. The proposed rule also would: test the use of bundled monthly payment amounts for DME and enteral nutrition under the CBP; modify CBP change of ownership (CHOW) and termination of contract rules; clarify qualifications for providing custom fitting services for orthotics; and revise Medicare hearing aid coverage policy. These provisions, which were part of a broader proposed rule that would also update the Medicare end-stage renal disease prospective payment system for 2015, are summarized in our Client Alert.
CMS Proposes Changes to Sunshine Act "Open Payments" Regulations in 2015 Medicare Physician Fee Schedule Rule
Today the Centers for Medicare & Medicaid Services (CMS) issued an advance copy of the CY 2015 Medicare Physician Fee Schedule (PFS) proposed rule, which includes certain changes to the regulations implementing the Physician Payment Sunshine Act, also known as the Open Payments program. These proposed changes come just three days after the inaugural deadline for applicable manufacturers and group purchasing organizations (GPOs) to report to CMS detailed information regarding payments and transfers of value made to physicians and teaching hospitals, as well as physician ownership information.
As previously reported, the Physician Payment Sunshine Act and related regulations require pharmaceutical and medical device manufacturers and GPOs to register with and submit to CMS data on their financial relationships with physicians and teaching hospitals. This financial data will be made publicly available on the CMS Open Payments website.
In the PFS proposed rule, CMS proposes the following changes to the Physician Payment Sunshine Act regulations:
- Deleting the definition of “covered device” as duplicative of the definition of “covered drug, device, biological or medical supply”
- Deleting the reporting exclusion for payments made to speakers at accredited continuing medical education events when certain requirements are met. Although CMS is deleting this express exclusion, it notes that such payments may still be excluded generally from reporting under the separate exclusion for indirect payments, which applies in those instances in which the applicable manufacturer is unaware of the identity of the covered recipient. In other words, the practical impact of this change may not be significant in the long run.
- Requiring the reporting of the marketed name of the drug, device, biological, or medical supply related to the payment being reported. Previously, CMS finalized that for drugs and biologicals, manufacturers must report the market name of a related product, but that for devices and medial supplies, manufacturers could report either the name under which the product is marketed or the general therapeutic area or product category associated with the device or medical supply.
- Requiring manufacturers to report stocks, stock options or any other ownership interest as distinct categories.
The proposed rule will be published in the Federal Register on July 11, 2014, and comments are due to CMS by September 2, 2014.
Today CMS released its proposed rule to update Medicare home health prospective payment system (HH PPS) rates for CY 2015. CMS estimates that the rule would reduce Medicare payments to home health agencies by approximately $58 million (-0.3%) in 2015 compared to 2014 levels. Specifically, while CMS anticipates a 2.2% home health payment update percentage ($427 million increase), the increase would be more than offset by implementation of the second year of a four-year phase-in of the rebasing adjustments to the HH PPS rates, which would result in a -2.5% adjustment ($485 million decrease).
The proposed rule also includes a number of policy proposals, including: simplification of the face-to-face encounter documentation requirements and clarification of when such documentation is required; changes to the HH PPS case-mix weights; revisions to the home health quality reporting program; simplification of therapy reassessment timeframes; a revision to the Speech-Language Pathology personnel conditions of participation; and limitations on the reviewability of CMS’s decision to impose a civil monetary penalty for noncompliance with federal participation requirements. Finally, the rule discusses insulin injections under the HH PPS and the delay in implementation of ICD-10-CM, and it solicits comments on the HHA value-based purchasing.
The official version of the rule is scheduled to be published on July 7, 2014. CMS will accept comments until September 2, 2014.
Yesterday CMS submitted to the White House Office of Management and Budget (OMB) a proposed rule to make changes to the Medicare Shared Savings Program, including provisions relating to Medicare payments to providers participating in ACOs. These changes would apply to existing ACOs and approved ACO applicants participating in the program beginning January 1, 2016. The text of the rule is not available until it is cleared by OMB and sent to the Federal Register.
On June 17, 2014, the Centers for Medicare & Medicaid Services (CMS) published a notice making changes to the Medicare payment adjustment for low-volume hospitals and to the Medicare-dependent hospital (MDH) program under the inpatient prospective payment system (IPPS). The adjustments, which were mandated by the Protecting Access to Medicare Act of 2014, apply to the second half of fiscal year (FY) 2014, or April 1, 2014 through September 30, 2014. The payment adjustments are expected to increase overall IPPS payments in FY 2014 by $227 million (an additional 0.24%) compared to the previous estimate of FY 2014 payments to all IPPS hospitals published in the IPPS final rule for FY 2014. Specifically, CMS estimates that approximately 600 hospitals qualifying as low-volume hospitals through September 30, 2014 will experience an increase in payments of approximately $161 million compared to CMS’s earlier estimate in the FY 2014 IPPS final rule, and 118 MDHs will experience an overall increase of approximately $66 million compared to CMS’s estimate in the final IPPS rule.
The Department of Health and Human Services (HHS) has released its Spring 2014 Semiannual Regulatory Agenda, which outlines planned regulatory initiatives across the Department and in a wide range of policy areas. Major prospective HHS rulemakings likely to have a significant economic impact on a substantial number of small entities are compiled in a separate Federal Register notice.
Obama Administration Finalizes Employment Orientation Limit Applicable to ACA Health Coverage Waiting Period
On June 25, 2014, HHS and the Departments of Labor and Treasury are publishing a final rule addressing the treatment of employment orientation periods for purposes of the Affordable Care Act (ACA) health insurance coverage waiting period limitation. The ACA generally bars employer-sponsored group health plans and group health insurance issuers from imposing a health coverage waiting period of more than 90 days after an employee is “otherwise eligible for coverage.” Being “otherwise eligible” to enroll in a plan means having met the plan's substantive eligibility conditions, which could include satisfying a bona fide employment-based orientation period. Under the June 25 final rule, such bona fide employment-based orientation periods may not exceed one month. The rule is intended to “ensure that an orientation period is not used as a subterfuge for the passage of time, or designed to avoid compliance with the 90-day waiting period limitation.” The final regulations apply to group health plans and group health insurance issuers for plan years beginning on or after January 1, 2015.
On May 23, 2014, CMS published a final rule revising the Medicare Advantage (MA) and Part D prescription drug program regulations to implement various statutory requirements, strengthen beneficiary protections, improve program efficiencies and payment accuracy; and clarify program requirements, generally effective for contract year 2015. CMS estimates that the proposed rule would reduce Medicare spending by $1.615 billion between 2015 and 2024. Among many other things, the final rule:
- Requires that Part D “negotiated prices” be inclusive of all price concessions from network pharmacies except contingent price concessions that cannot reasonably be determined at the point-of-sale, effective beginning with contract year 2016. CMS also specifies that additional contingent amounts, such as incentive fees, that increase prices and that cannot reasonably be determined at the point-of-sale are always excluded from the negotiated price.
- Implements an ACA requirement that MA plans and Part D sponsors report and return identified Medicare overpayments.
- Addresses prescription drug abuse by, among other things, authorizing CMS to revoke a physician’s or eligible professional’s Medicare enrollment if he or she has a pattern of prescribing Part D drugs that is abusive and represents a threat to beneficiary health and safety or otherwise fails to meet Medicare requirements, or if the prescriber’s Drug Enforcement Administration (DEA) certificate of registration or state license is suspended or revoked. The rule also requires prescribers of Part D drugs to enroll in Medicare or have a valid record of opting out of Medicare as a condition of coverage for their prescriptions, effective June 1, 2015.
Note that CMS is not finalizing its proposed changes to the ACA “drug categories or classes of clinical concern” requirement; instead, CMS will maintain the existing six protected classes. CMS also is not finalizing its proposal to require consistently lower negotiated prices at pharmacies offering preferred cost sharing in light of its adoption of a different definition of negotiated price than originally proposed. Moreover, CMS is not finalizing its proposed “any willing pharmacy” contracting provisions, nor the proposed changes to limit the authorized levels of cost sharing, pending further study.
On May 27, 2014, CMS published a final rule updating ACA Affordable Insurance Exchange and insurance market standards beginning in 2015. Among other things, the rule addresses standards related to: standardized consumer notices regarding insurance product discontinuation and renewal; Qualified Health Plan (QHP) quality data reporting to support quality ratings for plans on the insurance marketplace beginning in 2016; non-discrimination standards; employee choice in the Small Business Health Options Program (SHOP); enforcement remedies in federally-facilitated exchanges; the imposition of civil money penalties for providing false or fraudulent information to the Exchange and for improperly using or disclosing information; updated standards for “Navigators” and other consumer assistance programs; increases the risk corridor calculation ceiling on allowable administrative costs and the floor on profits by 2% “to account for uncertainty and changes in the market prior to and during benefit year 2015”; and modifies the allocation of reinsurance collections if those collections do not meet projections. The rule also provides for an expedited prescription drug exceptions process based on exigent circumstances (defined as when an enrollee is suffering from a health condition that may seriously jeopardize the enrollee’s life, health, or ability to regain maximum function, or when an enrollee is undergoing a current course of treatment using a non-formulary drug). Under this provision, health plans must make coverage determinations within 24 hours after receiving the request; once an exception is granted, issuers must continue to provide the drug throughout the duration of the exigency. CMS states that it will continue to monitor this issue to consider whether it should propose additional standards.
CMS has published a proposed rule that would formally adopt a previously-announced change to the EHR meaningful use stage timeline. Specifically, the rule would extend Stage 2 through 2016 and begin Stage 3 in 2017 (instead of 2016). The proposed rule also would allow providers to use 2011 Edition Certified Electronic Health Record Technology (CEHRT) or a combination of 2011 and 2014 Edition CEHRT for the EHR reporting period in 2014; beginning in 2015, all eligible hospitals and professionals would be required to report using 2014 Edition CEHRT. CMS will accept comments on the proposed rule until July 21, 2014.
CMS has just released a proposed rule that would require Medicare prior authorization (PA) for certain Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) items that the agency characterizes as “frequently subject to unnecessary utilization.“ As part of the rulemaking, CMS has developed a “Master List” of initial items that it considers to meet this standard based on being (1) identified in a GAO or HHS OIG national report published in 2007 or later as having a high rate of fraud or unnecessary utilization; or (2) listed in the 2011 or later Comprehensive Error Rate Testing (CERT) program's Annual Medicare FFS Improper Payment Rate Report DME Service Specific Overpayment Rate Appendix. CMS also proposes limiting the items on the Master List to those with an average purchase fee of at least $1,000 or an average rental fee schedule of at least $100 to allow CMS to focus on items with the largest potential savings for the Medicare Trust Fund. CMS proposes that the Master List will be “self-updating” annually, and that items generally will remain on the list for 10 years. Note, however, that presence on the Master List would not automatically require prior authorization. CMS would limit the PA requirement to a subset of items (called the “Required Prior Authorization List") “to balance minimizing provider and supplier burden with our need to protect the Trust Funds." CMS would publish the Required Prior Authorization List in the Federal Register with 60-day notice before implementation. CMS also proposes that the PA program could be implemented nationally or locally. The proposed rule does not announce the first items on the Required Prior Authorization List. Instead, CMS is seeking public comment on the number of items that should be selected initially and in the future, and the frequency with which CMS should select items.
The proposed PA process would not create new clinical documentation requirements for the selected DMEPOS items. Instead, the same information necessary now to support Medicare payment for the item would be submitted to the contractor, but before the item could be furnished to the beneficiary and before the claim could be submitted for payment. Upon receipt of a PA request, CMS or its contractors would determine whether the item complies with applicable coverage, coding, and payment rules, and then communicate a decision that provisionally affirms or non-affirms the request. CMS or its contractors would “make reasonable efforts” to provide a decision within 10 days of receipt of all applicable information, unless this timeline could “seriously jeopardize the life or health of the beneficiary,” in which case the target review period would be 2 business days.
The proposed rule also discusses, among other things: the process for updating the Master List; liability for an item on the Required Prior Authorization List if authorization is submitted and denied, the opportunity for unlimited PA resubmissions, and applicability to competitive bidding areas. The rule also would add a contractor's decision regarding prior authorization of coverage of DMEPOS items to the list of actions that are not initial determinations and therefore not appealable. The official version will be published on May 28, 2014. CMS will accept comments on the proposed rule until July 28, 2014.
In a related development, CMS has announced that it is expanding its current demonstration for prior authorization for power mobility devices to 12 additional states. CMS also will launch two payment model demonstrations to test prior authorization for hyperbaric oxygen therapy and repetitive scheduled non-emergent ambulance transport; information from these models will inform future CMS policy decisions on the use of prior authorization.
On the heels of its proposed rule to expand its health program exclusion authority, the Office of Inspector General (OIG) of the Department of Health and Human Services has published a proposed rule that would amend the health care program civil monetary penalty (CMP) regulations. The rule would codify the OIG’s expanded statutory authority under the Affordable Care Act to impose CMPs on providers and suppliers and would allow for significant penalties in a variety of scenarios, some of which could extend beyond what is currently permitted.
Reed Smith attorneys have prepared a Client Alert summarizing and analyzing the OIG’s proposed rule, including the various scenarios under which CMPs could be issued under the proposed regulations, such as: failure to report and return an overpayment; failure to grant OIG timely access to records upon request; ordering or prescribing items or services while excluded from a federal health care program, as well as arranging or contracting with an individual or entity who meets this criteria; making false statements or omitting or misrepresenting material facts in an application, bid, or contract; and failing to submit or certify drug-pricing and product information in a timely manner. In addition, the alert covers the changes in technical language proposed by OIG to clarify and more clearly define the scope of CMP regulations.
The Client Alert is available here.
On May 9, 2014, the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) published a proposed rule that would significantly expand the exclusion regulations applicable to persons or entities that receive, directly or indirectly, funds from federal health care programs (the Proposed Rule). The Affordable Care Act (ACA) expanded the OIG’s authority for exclusion, and authorized the use of testimonial subpoenas in investigations of exclusion cases. In this Proposed Rule, the OIG incorporates these statutory changes, revises the definitions applicable to exclusions, proposes early reinstatement procedures, and offers a number of proposed policy changes as to when and how exclusions may take place.
Reed Smith has prepared a Client Alert that provides an overview of the Proposed Rule, including: proposed revisions to definitions; new grounds for exclusion; clarifications to existing regulations to add mitigating and aggravating factors; early reinstatement procedures; and proposed procedural changes in the OIG’s exclusion authorities. In particular, we discuss the OIG’s assertion that there should be no statute of limitations within which it would have to seek exclusion. This limitless look-back authority could place a tremendous burden on providers and suppliers, since their conduct and compliance efforts could be second-guessed many years into the future, when supporting documentation and witnesses may be long gone. We also discuss how these proposed changes to the OIG’s exclusion authorities could impact the debarment authority applicable to government contracts more generally.
The Client Alert is available here.
Another OIG Fraud Rule in the Pipeline: Anti-kickback Safe Harbors, CMPs for Beneficiary Inducements, Gainsharing
On the heels of publication of sweeping proposed rules to expand its exclusion and civil monetary penalty (CMP) authorities, the HHS Office of Inspector General (OIG) is seeking White House clearance of another rule to expand its Medicare and state health care program fraud and abuse authorities. Specifically, yesterday the OIG sent to the Office of Management and Budget (OMB) a proposed rule that would add new anti-kickback safe harbors to reflect statutory changes, codify the Affordable Care Act’s definition of "remuneration," and add a gainsharing CMP regulation. The OIG also has indicated that a separate rulemaking on inflation adjustment for CMPs will be forthcoming, but that regulation has not yet been submitted to OMB. The OIG considers each of the proposed rules to be a stand-alone, independent rule, although there is obviously overlap in the subject matter. We will continue to closely follow these regulatory developments.
On May 12, 2014, the Centers for Medicare & Medicaid Services (CMS) published a final rule that reforms federal health policy regulations that CMS has identified as unnecessary, obsolete, or excessively burdensome on health care providers and suppliers. The rule also is intended to eliminate or reduce requirements that impede quality patient care or that divert resources away from providing high quality patient care. CMS estimates that the rule will result in annual recurring savings of about $660 million, plus a $22 million one-time savings to long-term care facilities from a sprinkler deadline extension. Highlights of the wide-ranging rule include the following:Continue Reading...
On May 8, 2014, CMS published its proposed rule to update the Medicare hospice wage index for FY 2015 and make other payment and policy changes. CMS estimates that hospice payments would increase by 1.3% ($230 million) in FY 2015 compared to FY 2014. Specifically, CMS would update the hospice per diem rates by 2.0% (reflecting a 2.7% market basket increase that is reduced by 0.7 percentage points under ACA adjustments), but this update is partially offset by a 0.7 percentage point cut resulting from the use of updated wage data and CMS’s continued phase-out of its wage index budget neutrality adjustment factor. Hospices that fail to report quality data will have their market basket update reduced by 2 percentage points.
The proposed rule includes a number of policy provisions. For instance, CMS is proposing to require hospices to file a beneficiary Notice of Election (NOE) within three calendar days after the effective date of hospice election; if an NOE is not filed timely, the days from the effective date of election to the date of filing the NOE would be the financial responsibility of the hospice. Likewise, CMS is proposing to require hospices to file a notice of termination/revocation within three calendar days of a beneficiary’s discharge or revocation, unless the hospice has already filed a final claim. The rule also would, among other things: require the hospice to identify the attending physician on the election form; revise the applicability of quality reporting penalties to new hospices; provide that claims will be returned to providers if the claim lists a nonspecific symptom diagnosis as the principal hospice diagnosis; and require hospices to complete their hospice cap determinations within 150 days after the cap period and remit any overpayments at that time.
CMS also is soliciting comments on several policy issues, including definitions of “terminal illness” and “related conditions” that are intended to “strengthen and clarify the current concepts of holistic and comprehensive hospice care under the Medicare hospice benefit.” CMS also seeks comments on processes that Part D drug plan sponsors could use to coordinate with Medicare hospices in determining coverage of drugs for hospice beneficiaries and resolving disagreements between the parties. Comments on the proposed rule will be accepted until July 1, 2014.
On May 6, 2014, CMS published a proposed rule that would update prospective payment rates for Medicare inpatient hospital services provided by inpatient psychiatric facilities (IPFs) for FY 2015. Under the proposed rule, the federal per diem base rate would be increased by 2.0%, reflecting a market basket increase of 2.7%, offset by a 0.3 percentage point reduction and a productivity adjustment reduction of 0.4 percentage points (both of which were mandated by the ACA). CMS also anticipates a 0.1 percent overall increase in IPF outlier payments from the update to the outlier fixed-dollar loss threshold amount. When all FY 2015 proposed payment and policy changes are considered, CMS estimates that total payments to IPFs would increase by 2.1% compared to FY 2014 payments (approximately $100 million). The proposed rule also would, among other things, establish a new methodology for updating the cost of living adjustment (COLA) and expand quality measures under the IPF Quality Reporting Program. In the proposed rule, CMS also discusses its intention to propose an IPF-specific market basket for FY 2016, and the agency addresses various coding changes. CMS will accept comments on the proposed rule until June 30, 2014.
CMS published a final rule on May 2, 2014 setting forth the methodology and payment rates for the new prospective payment system for FQHC services under Medicare Part B. FQHCs will transition to the new payment system beginning October 1, 2014, based on their cost reporting periods. Under the rule, Medicare generally will pay FQHCs a single encounter-based rate per beneficiary per day (initially set at $158.85), subject to certain adjustments and exceptions. For instance, the per diem rate is subject to a geographic adjustment factor, and it will be increased by 34% when an FQHC furnishes care to a patient that is new to the FQHC or to a beneficiary receiving a comprehensive initial Medicare visit. CMS is also allowing an exception to the single encounter-based payment when an illness or injury occurs subsequent to the initial visit, or when a mental health visit is furnished on the same day as the medical visit. CMS is accepting comments until July 1, 2014 on limited provisions impacting the FQHC PPS, including chronic care management, the use of new “G Codes” for Medicare payment to FQHCs under the PPS, and calculation of coinsurance for preventive services. Also as part of this rulemaking, CMS is finalizing a proposal to allow rural health clinics to contract with nonphysician practitioners when statutory requirements for employment of nurse practitioners and physician assistants are met. Finally, the rule amends the Clinical Laboratory Improvement Amendments (CLIA) of 1988 with regarding to enforcement actions for proficiency testing referral, in conformance with the Taking Essential Steps for Testing (TEST) Act of 2012.